Take Advantage of FHA Streamline Mortgage
The housing crisis resulted to steep decline in home values
. To make the situation worse, Fannie Mae and Freddie Mac can not be expected to forgive underwater debts. It means that the government will not be able to rescue upside down borrowers.
This may seem real bad news for borrowers. However, there is a flip side to this. The policy will bring stability in the bond market. It means that investors could have more confidence in funding mortgages. More importantly, the stability in the market can also stabilize interest rates and will promote free flow of capital.
If you are an upside down borrower, there are a few things that you can do. You are lucky if your mortgage is insured by FHA. If this is the case, you might qualify for the FHA streamline refinance. This program allows borrowers to apply for refinancing with reduced documentation. A no-appraisal scheme is available for you. Even if your home has lost its value considerably, this will not matter anymore because you can apply for refinancing without property appraisal.
There are three options provided by FHA for borrowers who want to obtain FHA streamline refinance. First, you can apply for no credit - no appraisal FHA streamline. You may also consider the FHA streamline with credit and appraisal. Lastly, you can opt for no closing cost FHA streamline.
If you do not have equity in your home, the FHA streamline with no appraisal would be a good option. As the name implies, this loan does not require an appraisal. There is a reason why this option is available. Lenders believe that your ability to repay the loan will increase substantially if the interest rate will be reduced. This prevents foreclosure and lenders will not view you as a credit risk.
This program may not require you to produce a credit report. However, you must be on time with your mortgage payments in order to qualify for the program. On the other hand, the lender may require a credit report if you are adding a co-borrower. You have to remember that the rules for FHA streamline refinance may change frequently. Your mortgage lender or broker will update you about these changes.
FHA mortgage however has some disadvantages. In most cases, you may be required to pay some out of pocket expenses in order to get FHA streamline refinance. The expenses may include points, impounds and other closing costs. If you are lucky, some the costs can be bundled in the loan balance. However, this will depend on how much you have paid down the mortgage.
To qualify for FHA streamline refinance, you have to meet the requirements as stated in the guidelines. The loan should also result to tangible reduction of monthly mortgage payment or payment terms. This loan program also has other restrictions. For example, the loan can not exceed 97.75 percent of the original value of the home.
You can take advantage of FHA streamline mortgage now. This mortgage program could be the solution to save your home from foreclosure. But remember that the FHA frequently changes the guidelines so you have to keep yourself updated.
Take Advantage of FHA Streamline Mortgage
By: Rob Blake
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